November 28, 2024
- US Thanksgiving saps liquidity world-wide
- Trump tweet boosts Mexican peso
- US dollar opens mixed-JPY underperforms
FX at a Glance
Source: IFXA/RP
USDCAD open 1.4005, overnight range,1.3999-1.4002, close 1.4030
USDCAD continues to slide lower after peaking at 1.4178 on Tuesday and exacerbated by softness in some of yesterday’s US data dump. Weekly jobless claims were lower than expected, Durable Goods Orders were soft while Wholesale Inventories and the Chicago PMI were down. The news was offset to a degree by US Q# GDP rising 2.8% as expected and a tick higher in the PCE price index (actual 2.3% y/y, September 2.1%).
It is also month-end and as of yesterday, the S&P 500 is up 4.71% which suggests portfolio managers need to sell USDCAD. Those flows will linger in the market until early next week.
USDCAD remains a “buy on dips” as long as the CAD/US 10-year yield spread continues to widen and until the Trump threat about tariffs and the border are resolved.
The US and Canadian economic calendars are empty and it should be a very quiet trading day.
USDCAD Technicals
The intraday technicals are modestly bearish. USDCAD is in a steep downtrend channel (hourly chart) while below 1.4040 with the base of the channel at 1.3950. A topside break would negate the pressure and target 1.4080.
Longer term, USDCAD is in a uptrend channel that began with the break above 1.3650 at the beginning of October and has continued unabated since. The base of the channel is at 1.3960 while the top is at 1.4170
For today, USDCAD support is 1.3980 and 1.3960. Resistance is 1.4040 and 1.4070.
Today’s Range: 1.3970-1.4040.
Chart: USDCAD daily
Source: Oanda.com
Fat Turkeys and Thin Trading
It’s an American holiday, but FX and 10-year bond traders around the world appear to have taken the day off. The US dollar is little changed in early trading and the US 10-year Treasury yield is flat at 4.262%. Equity traders appear to have a slightly better work ethic. Asian equity indexes are higher with Japan’s Topix up 0.82% and Australia’s ASX 200 gaining 0.45%. The Hong Kong Hang Seng Index lost 1.20%. European bourses are in the green led by a 0.89% rise in the German Dax. US S&P 500 futures are up 0.12%. Gold prices drifted higher, rising from 2621.02 yesterday to 2647.10 today.
Meanwhile, President Biden is missing in action. He may have the title, but Donald Trump wields the power and he is happy to roil markets around the world from the comfort of Mar o Largo.
“You Say You Want A Revolution”
China’s self-proclaimed Emperor Xi Jinping appears to be as nervous as the proverbial long-haired cat in a room filled with rocking chairs. He seems to be purging the leadership ranks of the Peoples Liberation Army because it is hard to be the Son of Heaven when the Devil has all the guns. Top PLA General Miao Hua has just been suspended and placed under investigation for “serious discipline violations. He is reportedly, one of the top generals on the Central Military Commission. The news follow’s yesterday’s Financial Times report (denied by China) that Defence Minister Dong Jun was under investigation for corruption. His predecessor was dumped without explanation and another nine senior military officers were removed at the same time.
EURUSD
EURUSD traded in a 1.0528-1.0570 range overnight as it consolidated yesterday’s gains stemming from ECB policymaker Isabel Schnabel’s comments. She indicated that the ECB may cut rates slower than the market is anticipating. The EC reported that Economic Sentiment was broadly stable in the EU and the euro are in November. The news had little impact on trading.
GBPUSD
GBPUSD drifted in a 1.2645-1.2683 range. Traders were unmotivated due to a lack of economic data and the US Thanksgiving holiday. GBPUSD is being underpinned by month end US dollar selling pressures as well as EURGBP selling due to French politics where Michel Barnier’s budget proposal is proving to be very unpopular.
USDJPY
USDJPY drifted higher overnight, rising from 150.93 to 151.99 and is sitting at 151.86 today. US dollar selling pressure due to month end, anticipation of a BoJ rate hike in December, and steady to soft US Treasury yields.
AUDUSD and NZDUSD
AUDUSD dipped then rallied in a 0.6476-0.6510 range. The currency did not get much support from RBA Governor Michelle Bullocks comments suggesting that inflation is still too high to consider rate cuts. Traders ignored higher than expected Q3 Capital Expenditure numbers (actual 1.1%, forecast 0.9%, Q2 -2.2%)
NZDUSD traded quietly in a 0.5880-0.5906 range with prices. The RBNZ cut rates as expected on Tuesday but hinted at a slower pace of rate cuts in the future, which is giving the currency a bit of support.
USDMXN
USDMXN is the big mover overnight, falling from 20.6125 to 20.2031 after Donald Trump tweeted on Truth Social about a “wonderful conversation with the new President of Mexico.” He said she has agreed to stop migration through Mexico. It’s Trump, it’s hyperbole and the USDMXN slide will end abruptly.
FX high, low, open (as of 6:00 am ET)
Source: Investing.com
China Snapshot
PBoC Fix: 7.1894 (prev. 7.1982)
Shanghai Shenzhen CSI 300 fell 0.88% to 3872.55
Chart: USDCNY and USDCNH
Source: Investing.com
